Entrepreneurship and the theory of the firm are two of the fastest-growing fields in eco-nomics and management. The two fields developed largely in isolation and are only now beginning to be brought together. We argue that each field has much to learn from the other and that combining them yields a better theory of the firm and a fuller understand-ing of the nature and effects of entrepreneurship in the economy. Specifically, the Knightian concept of entrepreneurship as judgment, combined with the Austrian ap-proach to capital heterogeneity, leads to a number of unconventional insights about the nature, boundaries, and internal organization of the firm. The judgment perspective also shifts attention from the discovery or recognition of entrepreneurial opportunities to the exploitation of those opportunities through the acquisition, combination, and recombina-tion of resources, adding to our understanding of the causes and consequences of entre-preneurship.

Filer i denne post: 1

The organizational science literature on motivation has for long been polarized into two main positions; the organizational economic position focusing on extrinsic motivation and the organizational behavior position emphasizing intrinsic motivation. With the rise of the knowledge economy and the increasing levels of complexities it entails, such polarization is not fruitful in the attempt to explain motivation of organizational members. This paper claims that a more nuanced perspective on motivation, acknowledging the co-existence of intrinsic and extrinsic motivation, the possible interaction between the two as well as different types of motivations filling in the gap between the two polar types, is urgently needed in the organizational science literature. By drawing on the research on intrinsic and extrinsic motivation conducted in social psychology and combining this with contributions from organizational science, economics, and sociology, this paper attempts to develop an emergent understanding of motivation, which is more facetted than the one dominating organizational science currently. Based on these discussions, eleven implications for future research on motivation in organizations are proposed.
Keywords: Work motivation, intrinsic motivation, extrinsic motivation, motivation systems, and the knowledge economy
JEL Codes: M12, M52, M54

Filer i denne post: 1

While the extant literature on offshore outsourcing deals with this operation mode in
isolation, and typically with a focus on cost effects, we address the broader question of
how companies choose and use outsourcing as part of foreign operation mode
development and as a contributor to internationalization. We use a case study of the
Danish company SimCorp and the development of its operations in Kiev, Ukraine, to
show how learning in various forms, control concerns, and relations with foreign partners
may interact and build momentum for mode change. SimCorp’s experience demonstrates
that outsourcing can be used proactively to promote expanded international operations.

Entrepreneurs in a competitive economy face three fundamental problems. They need to search for
and discover a business opportunity (Kirzner, 1973), evaluate it (Knight, 1921), and then seize the
opportunity to reap entrepreneurial profits (Schumpeter, 1911) (Langlois, 2007). The problem that
we address is how the ability to exploit business opportunities is influenced by entrepreneurial search
and the economic organization of entrepreneurship (Arrow, 1962; Lippman & Rumelt, 2003; Aghion
et al., 2005; Foss et al., 2007). In many cases, the discovery for a new business opportunity needs to
be motivated by expected gains, since the search and evaluation of business opportunities is a costly,
resource-consuming process (Denrell, Fang & Winter, 2003; Nickerson & Zenger, 2004; Foss &
Klein, 2005; Teece, 2007; Foss & Foss, 2008).1 We show the critical role of expectations for
understanding of the economic organization of entrepreneurship, and argue that transaction cost
economics, with its insistence on bounded rationality, but far-sighted contracting offers useful
insights and presents rich opportunities for further theoretical and empirical research (cf. also
Furubotn, 2002).

Inter-organizational collaboration is an organizational form that is used by an increasing number of firms to meet a wide range of organizational aims (Hagedoorn 1996; 2002; Narula, 2004; Casson and Mol, 2006). Inter-organizational alliances are a preferred way of sourcing a variety of resources (Eisenhardt and Shonhoven, 1996; Gulati, 1999; Van de Ven and Walker, 1998), and a prominent view of the strategic alliance literature suggests that inter-firm collaboration has a special strength in serving as a mechanism by which a firm can leverage its skills, acquire new competencies, and learn (e.g. Kogut, 1989; Hamel, Doz, and Prahalad, 1989; Huber, 1991; Larsson, Bengtsson, Henriksson, and Sparks, 1998; Lyles, 1988; Powell and Brantley, 1992; Inkpen and Tsang, 2008). As firms collaborate at an increasing rate (Khanna et al, 1998) it becomes still more important to understand how these firms can be instrumental in organizing and governing the various collaborative knowledge processes that take place in alliances.

Filer i denne post: 1

Offshoring can be defined as the relocation of organizational tasks and services to foreign
locations. Increasingly, firms experience that unforeseen costs and difficulties of managing
offshoring undercut anticipated benefits; that unexpected challenges of offshoring jeopardize and
eventually undermine initial objectives. Guided by the research question—what are the
organizational consequences of offshoring?—the purpose of this thesis is to investigate why
some firms fail when offshoring and other do not.
The thesis consists of four research papers using various datasets and methodologies that
investigate offshoring in an organizational context. The first paper investigates how the
complexity of offshoring leads to ‘hidden costs’ of implementing offshoring activities. The
second paper looks at how these hidden reconfiguration costs influence the process performance
of the offshored activity and how this relationship is moderated by the modularity of that
activity. The third paper investigates the effect of the organizational reconfiguration of
offshoring on firms’ strategies. The final paper studies different strategies of adaptation in
offshoring.
Taken together, this thesis argues that whether firms relocate activities with the purpose
of accessing resources or as a response to political pressures, the process of offshoring presents
firms with the challenge of coordinating and integrating offshoring activities in a global
organization. The complexities and uncertainties of an organization consisting of a number of
offshored activities (in contrast to an organization with only co-located activities) require firms
to invest additional resources in coordination mechanisms so that an efficient reintegration can
be achieved.

For decades, the literatures on firm capabilities and organizational economics have been at odds with each other, specifically relative to explaining organizational boundaries and heterogeneity. We briefly trace the history of the relationship between the capabilities literature and organizational economics and point to the dominance of a “capabilities first” logic in this relationship. We argue that capabilities considerations are inherently intertwined with questions about organizational boundaries and internal organization, and use this point to respond to the prevalent “capabilities first” logic. We offer an integrative research agenda that focuses, first, on the governance of capabilities and, second, on the capability of governance.

Filer i denne post: 1

This chapter reviews and discusses rational-choice approaches to organizational governance. These approaches are found primarily in organizational economics (virtually no rational-choice organizational sociology exists), particularly in transaction cost economics, principal-agent theory, and the incomplete-contracts or property-rights approach. We distill the main unifying characteristics of these streams, survey each stream, and offer some critical commentary and suggestions for moving forward.

Filer i denne post: 1

Austrian economics focuses on markets, but has much to say about organizations. In
particular, Austrian insights on the structure of production, the heterogeneity and
subjectivity of resources, the nature of uncertainty, the role of monetary calculation,
and the function of the entrepreneur provide solid foundations for a distinctly
Austrian theory of organizations. We review these insights, discuss recent literature
on Austrian economics and the theory of the firm, and suggest new directions for
developing and extending an Austrian approach to organizations.

Recent work links entrepreneurship to the economic theory of firm using the Knightian concept of entrepreneurship as judgment. When judgment is complementary to other as-sets, and these assets or their services are traded in well-functioning markets, it makes sense for entrepreneurs to hire labor and own assets. The entrepreneur’s role, then, is to arrange or organize the human and capital assets under his control. We extend this Knightian concept of the firm by developing a theory of delegation under Knightian uncertainty. What we call original judgment belongs exclusively to owners, but owners may delegate a wide range of decision rights to subordinates, who exercise derived judgment. We call these employees "proxy-entrepreneurs," and ask how the firm’s or-ganizational structure — its formal and informal systems of rewards and punishments, rules for settling disputes and renegotiating agreements, means of evaluating perform-ance, and so on — can be designed to encourage forms of proxy-entrepreneurship that increase firm value while discouraging actions that destroy value. Building on key ideas from the entrepreneurship literature, Austrian economics, and the economic theory of the firm we develop a framework for analyzing the tradeoff between productive and de-structive proxy-entrepreneurship. We link this analysis to the employment relation and ownership structure, providing new insights into these and related issues in the eco-nomic theory of the firm.
Keywords: Judgment, entrepreneur, delegation, employment relation, ownership.
JEL Codes: B53, D23, L2

Filer i denne post: 1

This paper addresses a recent strand of offshoring research that concerns the processes of evolution and change that appear in offshoring partnerships after the launch of offshoring operations. Based on longitudinal case studies of offshoring of advanced IT and engineering services from Danish firms to Indian firms, I identify a process model with three stages that captures the evolution of the initial 1-2 years of the offshoring partnership. Overall, the data portray a rapid development of the Danish-Indian offshoring partnerships which show that once trust is established and offshoring firms gain experience, the offshoring firms will increase the sophistication as well as expand the range and volume of advanced work done offshore. The dynamics of the process therefore suggest that at a broader scale, advanced services offshoring will increase in the coming years.

Filer i denne post: 1

Extant research offers conflicting predictions about the effect of pay dispersion on team performance. We collected a
unique dataset from the Italian soccer league to study the effect of intra-firm pay dispersion on team performance, under
different definitions of what constitutes a ‘‘team’’. This peculiarity of our dataset can explain the conflicting evidence.
Indeed, we also find positive, null, and negative effects of pay dispersion on team performance, using the same data but
different definitions of team. Our results show that when the team is considered to consist of only the members who directly
contribute to the outcome, high pay dispersion has a detrimental impact on team performance. Enlarging the definition of
the team causes this effect to disappear or even change direction. Finally, we find that the detrimental effect of pay
dispersion is due to worse individual performance, rather than a reduction of team cooperation.

Multinational enterprise in control of dispersed overseas resources and capabilities has been linked to strategic flexibility that allows the firm to take advantage of opportunities and manage exposures imposed by changing environmental conditions. This paper analyzes the implied performance and risk management effects in a comprehensive sample of public firms and finds supportive evidence for the proposition that multinationality can enhance performance across industries. However, the ability to exploit upside potential and avoid downside risk is industry specific. The positive effects of multinationality are found particularly pronounced among firms operating in knowledge intensive service industries while firms in capital-intensive primary industries display the inverse relationships.
Keywords: Strategic flexibility, Real options, Risk management

Manuscript Type: Empirical
Research Question/Issue: Institutional and transaction costs theories highlight the idea that group affiliated firms outperform unaffiliated firms in emerging economies. The persistence of superior performance for group affiliated firms is, however, questioned by the fast and recent development of markets and institutions in these countries. In this article, we explore this link between firm performance and the evolution of institutional environment.
Research Findings/Insights: The setting of the empirical investigation is India in the postreform era (post 1990). We test for effects of business group affiliation on firm performance over a 17 year time period from 1990 to 2006. Our findings show that (i) the performance benefits of group affiliation erode with the evolution of the institutional environment; (ii) older affiliated firms are better able to cope with institutional transition than younger affiliated firms; (iii) service-sector affiliated firms are better able to cope with institutional transition than manufacturing-sector affiliated firms.
Theoretical/Academic Implications: Our findings both support the institution- and transaction costs-based theory of business groups, and extends it by incorporating a dynamic and longitudinal component. They also demonstrate – in line with recent works - that the benefits of group membership differ for different types of member firms.
Practitioner/Policy Implications: The article has implications for both managers and policy makers. Managers of business groups should timely adapt their strategy to the evolution of the institutional environment. Policy makers should, instead, devote attention to the consequences of their policies because they may undermine the efficiency of large national companies.

This paper expands entry mode literature by referring to multiple modes exerted in different value chain activities within and across host markets, rather than to a single entry mode at the host market level. Scale of operations and knowledge intensity are argued to affect firms’ entry mode diversity across value chain activities and host markets. Analyzing a sample of Israeli based firms we show that larger firms exhibit a higher degree of entry mode diversity both across value chain activities and across host markets. Higher levels of knowledge intensity are also associated with more diversity in firms’ entry modes across both dimensions.

The literature suggests that important strategic initiatives can derive from employees
within the organization as they respond to needs and opportunities observed in daily
operations. This seems to indicate that employees have a good sense of the firm’s
operational capabilities observed through direct interactions with colleagues, customers
and partners. Executives make their own judgments about the corporate capabilities
from discussions with various managers, other executives and industry specialists. But,
the information gathered by executives may be qualitatively different from the
conditions sensed by the employees. So, we arranged a contest between operational
capabilities assessed by employees and executives and the relationship to subsequent
firm performance. Based on more than 400 individual data points collected from two
medium-sized organizations over a period of eighteen months, advanced distributed lag
time-series analyses show that the sensing of front-line employees (surprisingly) is a
better medium-term predictor of organizational performance than executive judgments.
These results have implications for the way organizations set up their management
information and communication structure.

Filer i denne post: 1

The Role of Mentalizing for Reward Design and Managenemt in Principal-Agent Relations

Foss, Nicolai J.; Stea, Diego(Frederiksberg, 2013)

[Flere oplysninger]

[Færre oplysninger]

Resume:

Agency theory is one of the most important foundational theories in management research, but it rests on tenuous cognitive assumptions. We combine classical agency theory with a realistic theory of the intrinsically imperfect human potential for interpersonal sensemaking. This allows us to systematically show how the principal’s ability to mentalize with the agent influences value creation in principal-agent relations, and to link this to organizational sensemaking instruments.

Filer i denne post: 1

Corporate failures, periodic recessions, regional debt crises and volatile financial markets have
intensified the focus on risk management as the means to deal with turbulent conditions. The ability to
respond effectively to abrupt environmental impacts is considered an important source of competitive
advantage. Yet, surprisingly little research has analyzed whether the presumed advantages of effective
risk management are associated with superior outcomes. Here we present a comprehensive study of
risk management effectiveness and the relationship to corporate performance based on more than
33,500 observations in 3,400 firms over the turbulent 20-year period 1991-2010. Determining effective
risk management as the ability to reduce earnings and cash flow volatility, we find that both have
significant positive relationships to lagged performance measures after controlling for industry effects,
company size and financial leverage.